Filing for Bankruptcy

Written by , June 27, 2011

Filing for BankruptcyBankruptcy is something that we all hope we never have to go through. But for all too many consumers, unforeseen financial difficulties make bankruptcy one of the few options to get one’s credit and good name back. Before you file for bankruptcy, try to work out deals with your creditors, go through credit counseling, or see if a lawyer can help you find a workable solution.

If your finances have been derailed, however, bankruptcy may be your only hope for getting your debts behind you and making a fresh start. While it’s certainly not the ideal solution, it might be the best thing you can do in certain circumstances.

Here’s some advice if filing for bankruptcy seems to be your only option.

  • Make absolutely sure that you have no alternatives. If you have assets that you can afford to part with, and their value exceeds that of your debts, you would probably be better off selling them and paying your creditors. And if you haven’t considered credit counseling, go ahead and give it a try. It could get you out of debt without court intervention. But if you’ve tried these things and failed, bankruptcy is the next step.
  • Realize that your credit will be ruined, at least for a while. A bankruptcy will remain on your credit report for up to 10 years. That means you may not be able to borrow money for some time. But if your credit is already a mess, this won’t be a big issue.
  • Remember that bankruptcy is a matter of public record. That means that anyone, including future creditors, could find out about it. This should make you think twice about whether or not bankruptcy is the best way to handle your credit problems.
  • Filing bankruptcy isn’t cheap. You must pay attorney fees and court costs, which could add up to a thousand dollars or more. If your financial problems are small enough that you could get them straightened out with a couple thousand dollars, you might be better off to keep trying to negotiate with your creditors.
  • If you’re truly in over your head, bankruptcy may be the only way out. The best thing you can do is to go through with it and keep your head held high. You certainly aren’t the only person who has ever had more debt than they could repay.
  • Remember that you won’t necessarily lose everything you own. Debtors may exempt several thousand dollars’ worth of property. You’ll need to talk to your attorney about your individual circumstances, but you could come out of bankruptcy with both your home and your car. It’s possible that you may have to give up some of your possessions, but that’s not always the case.
  • Bankruptcy is something that nobody wants to go through. But in some cases, it’s the only way to salvage your credit and the most important things in your life. If filing for bankruptcy appears to be your only option, consult a qualified attorney to help you determine your next steps.

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